Eurex to launch FX futures!?

Discussion in 'Index Futures' started by fxfuturesguy, Jun 16, 2005.

  1. Looks like Eurex will enter FX market using Eurex US. Here's the press release. Think this will work?

    Eurex Extends its Global Liquidity Network With Introduction of Foreign Exchange Futures
    New asset class further expands financial derivative product portfolio/ Ferscha: Customers to benefit from access to an additional fast growing product space/ Eurex leverages its Eurex US exchange and 23 hour trading platform for FX trading

    Jun 16 2005
    The world’s largest derivatives exchange Eurex announced on Thursday that it will introduce foreign exchange (FX) futures on September 23, 2005. This move marks the extension of the Eurex global liquidity network into a new asset class. Contracts will initially be listed on six major USD currency pairs (Euro, Australian Dollar, British Pound, Yen, Swiss Franc, Canadian Dollar) and four cross currency pairs (EuroYen, SterlingYen, EuroSwiss, EuroSterling). The contracts will be traded on Eurex US, leveraging the 23 hour trading platform and U.S. regulatory environment for FX trading. Contracts will be cleared by The Clearing Corporation (CCorp), using the Concero clearing services platform.

    "FX is one of the fastest growing markets in the world, and it is the only major financial asset class where Eurex has not historically been represented," said Rudolf Ferscha, CEO of Eurex. "By entering the FX market Eurex will further expand its portfolio of financial derivative products. Structural changes in the global FX markets have further driven use of FX products and increased demand for the transparency and reduced counterparty risk offered by on exchange markets. Listing FX contracts on Eurex US will offer the global marketplace the opportunity to trade FX on a liquid and transparent market with a highly effective distribution network."

    "As part of the Eurex Global Liquidity Network, the Eurex US exchange and technology platform are uniquely positioned to meet the worldwide demand for FX futures contracts," said Satish Nandapurkar, CEO of Eurex US. "By making use of Eurex US’ existing 23 hour trading platform, we are able to satisfy customers’ immediate demand for additional liquidity and significantly lower their cost of execution."

    Eurex US will waive all trading fees for FX contracts for all market participants for the duration of 2005. FX contracts on Eurex US will be supported by a selected network of banks and market making firms, ensuring liquidity from launch.

    Eurex is the world’s largest derivatives exchange and a market leader in interest rate, equity and index derivatives. On Wednesday June 15, Eurex traded record volume of 8.86 million contracts, more than any derivatives exchange has ever traded before on a single day.
  2. hopefully this will mean reduced commissions
    and maybe even provide some arb opps

    for traders of eurex fx products
  3. just21


    They should launch options as well, that could take some volume from cme as they have no liquidity on the screens yet.
  4. Good Stuff!

    Now launch energy products!
  5. why don't they launch electronic products that no one has offered yet like metals,ag's, or a crb index future? why just continue to copy existing products? i do hope the currency futures work though, the more competion the better. they should drop those annoying cancel fees also. havea good one:D
  6. it seems you guys demanding energy futures have no idea of how these products work.

    it would take large infrastructural preparations to trade and settle these contracts.

    while it's quite easy for an exchange to introduce some cash settled contracts or financial or fx futures, physical delivery requires far more work.

    it may be a matter of fact that NYMEX sucks, but the decades of experience (and their contractors) they have in that sector really secure them.
  7. It seems you assume that all trades in energy products are by commercials. I would guess that over 40% of the energy volume is purely by specs who would frankly PREFER cash settlement.

    In sum EUREX US should launch cash settled energy products for the specs and the commercials can stay at the NYMEX if they want.
  8. just21


    Brent crude is available on IB from IPE, symbol COIL. Is all electronic. No exchange fee for data.
  9. CPTrader, do you really see any chance a cash settled, say Crude Oil Future, would attract any traders ?

    I have strong doubts here.
    Another factor is, that Nymex traders would definetly give hell to any market makers at EurexUS when trying to hedge, so it would even be hard to get any MM's for such a product.

    It would probably end up like that ZG & ZI stuff.

    The IPE is the only viable alternative currently, and it seems to me they have begun to take volume off Nymex Light Sweet Crude contracts since May. Maybe wait for another 3, 4 expirations and it becomes more visible.
  10. NYMEX locals/market makers are overrated.

    It's very simply a basic economic question of supply and demand.

    I estimate that at least 40% of trading activity in crude/natgas is purely speculative. If EurexUs lists these products and attracts even 80% of this speculative traidng volume, NYMEX will be in big trouble.

    Also of the other 50 - 60% commercial/hedging trading volume - I will also guesstimate that about only half of it is PURE COMMERCIAL volume i.e. activity by traders who want or have no aversion to taking delivery.

    If EurexUS attracts half of that pseudo commerical volume then you really see that NYMEX will be in trouble. I may be adopting an over simplistic approach, but I am faily confident in my thesis.
    #10     Jun 20, 2005